Warsaw, 12th September 2019
Entrepreneurs’ evaluation: raising the minimum wage has the greatest impact on business operations
The Union of Entrepreneurs and Employers together with Maison & Partners asked Polish entrepreneurs what their evaluation of the government’s individual actions is and how these actions affect their businesses. Entrepreneurs declare that it is the increase in the minimum wage what will among other things impact their businesses the most. At the same time, the government’s actions in this area are among the worst rated. Most importantly, the study was conducted before the ruling party, Law and Justice, made its plans regarding the increase public.
The survey was conducted by the Union of Entrepreneurs and Employers together with Maison&Partners among Polish entrepreneurs. In its first part, Polish companies were asked to present their perception of the impact of the political and economic situation on running business activity.
In spite of the emerging symptoms of the economic slowdown predicted by entrepreneurs (the Union’s “Busometr” survey for the 2nd half of 2019), companies still perceive the general internal and global economic situation better than specific phenomena appearing on the horizon.
According to Polish companies, the government’s economic policy, and in particular the uncertainty of tax and economic law, have the most significant impact on their functioning. Even more pessimistic, entrepreneurs evaluate poorly the activities executed by the government in this area. Looking at the data gathered, one can also conclude that the Polish business environment is awaiting the results of the coming elections to the Polish parliament. In their opinion, the autumn elections may significantly affect their business operations.
Interestingly though, Polish companies do not perceive the ongoing Brexit process as an important factor that may disrupt their operation. The study showed that there are other changes in the external environment that are seen as more disturbing.
The Union of Entrepreneurs and Employers also asked Polish companies to express their opinion on the legislative changes, both already implemented and only announced, by the Polish government. The greatest impact on the functioning of enterprises would have the simplification of the taxation system and – in a negative way – raising the minimum wage. This last issue has also become extremely important in face of recent announcements of Law and Justice regarding a significant increase in minimum remuneration. One should stress that the Union’s study was conducted in July this year, that is before the announcements of plans for significant changes in this respect were made.
Legislative changes that the government has already implemented in recent years, however, do not seem to have such a significant impact on businesses as expected. The study showed that entrepreneurs did not strongly feel the impact of the amendments introduced, among others the act on payment gridlocks, reducing the CIT rate to 9%, changes in the Open Pension Fund system or introducing Employee Capital Programs. Exemption from Personal Income Tax for persons under 26 years of age is only in force since 1st August this year, so entrepreneurs during the July survey did not yet feel the impact of these changes on their operations.
Entrepreneurs were also asked about their assessment of legal changes for business. Preferential rates of contributions to the Polish Social Insurance Institution (ZUS) and of Corporate Income Tax are well perceived by Polish companies as well as – despite only a moderate impact on business – the act on payment gridlocks. Companies evaluate every activity intended to simplify the tax system well.
On the other hand, the changes in the Open Pension Fund system, the implementation of Employee Capital Programs, the controversial PIT exemption for selected incomes of people under 26 years of age or plans to abolish the 30-fold limit for social security contributions are evaluated by entrepreneurs badly. The lowest-rated solutions also include raising the minimum wage. At this point, one must again stress that the surveyed entrepreneurs were not yet familiar with the “bold” plans of Law and Justice in this respect.
“Business operations vs the political and economic situation” is a study of the entrepreneurs’ perception and evaluation of new legislative solutions and the impact of the political and economic situation on conducting business operations in Poland. The study is a new project of the Union of Entrepreneurs and Employers and Maison&Partners.
The study was executed using the CAWI (Computer Assisted Web Interviews) method – an online survey panel. Sample size N = 609. The survey was carried out in July 2019.
The survey’s sample structure is representative for enterprises in Poland according to company size (micro, small and medium enterprises).
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